Author: Michael Ferrari, PhD
VP, Applied Technology & Research
For the start of 2010, we are revising our position (up) for raw sugar futures for the next month. In recent weeks, we have been discussing the current fundamentals in sugar in the context of a market that shows fair value in the 24-25.5 cent range. Regarding technicals, each time ICE futures tested the 24-25 cent resistance level, they have promptly reverted back down to the 22-23 cent range. Given the global supply situation which is still showing a deficit, with the S-D gap decreasing, we placed a ceiling for nearby futures around the 26 cent mark. Despite our forward view of an improving supply situation (globally) spurred by the El Nino helping Brazil’s Centre-South, the recent breakout of March futures testing 28 cents is causing us to revise our price outlook upwards. In the short term, we are now placing fair value in the 25.5 to 27 cent range, as long as crude oil remains at or above the $80 mark. When crude retreats, this will be our first signal to revise our short term expectations downward.
